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What Debts Can’t Be Discharged?

Spousal or child support, speeding tickets, student loans, retirement plan loans, and debt incurred post-bankruptcy are among the claims that cannot be discharged. Also, if a creditor alleges that its claim arises out of fraud, willful injury embezzlement, larceny and other enumerated conduct, such a claim may be rendered nondischargeable if the creditor files a complaint to except that debt from discharge and prevails on that complaint.

Will I have to go to court if I file for Bankruptcy?

Typically, no. However, debtors must attend a Creditor’s meeting that is presided over by a Trustee to answer questions regarding the information contained in your petition and schedules. Currently, these hearing are conducted telephonically do to Covid restrictions.

What is an exemption?

Only individual debtors may claim exemptions. Exemptions A allow a debtor to protect certain property from the reach of creditors or the trustee in a bankruptcy proceeding. Exemptions are capped to certain dollar amounts, so it important to discuss with your attorney, which of two sets of exemptions available in California are more beneficial in your particular circumstances. Generally, you will want to select a set of exemptions that will exempt the most possible property from administration by the trustee.

Should I pay off my car before I file for bankruptcy?

No. Unless the value of the car is less than the amount you can safely claim as exempt. Discuss this with your attorney.

How long does a bankruptcy filing stay on my credit record?

Under federal law, a proceeding may be reported for up to ten (10) years, however this does not mean that you cannot rehabilitate your credit score after your discharge to a point where you can qualify for a mortgage or loans at decent interest rates.

Should I take real property out of my name prior to filing for bankruptcy?

No. Transfer that are made prior to filing bankruptcy are closely scrutinized and may constitute a bankruptcy crime if the purpose is to hide such assets. Moreover, you must disclose any transfers which will likely cause problems not only for you, but to the individual to whom such transfer was made.

Can my discharge be denied?

Honest debtors receive a discharge in bankruptcy and thus obtain a fresh start to build their future lives. Certain improper conduct prior to or during your bankruptcy petition however can result in you are defrauding the denial of a discharge. For example, Failure to list assets with the intent of hiding it from the trustee, destroying or mutilating property within a year of the date of your filing could result in a complaint to deny your discharge. If you conceal, falsify or destroy records, this could result in a denial of your discharge. A bankruptcy trustee or a creditor can file a complaint to deny your discharge if you have engaged in any prohibited conduct. Also, failing to complete a financial management course as required, will result in your case closing without a discharge being granted. Keep in mind that you are only entitled to a discharge once every eight years. If you file a chapter 7 within 8 years of your last discharge, you are ineligible for a discharge. The best course is to be completely honest and discuss any such issues with your counsel.